Trump-Musk Feud Takes Toll on Tesla Stock
Stockholders Selling Off Tesla on Prediction of Trump's Potential Attack via His Car Business
Elon Musk's electric vehicle company, Tesla, suffered a shocking 14% plunge in shares in just three hours on Thursday, as investors ditched their holdings in a dramatic sell-off. This was sparked by a fierce spat between Musk and President Donald Trump that started over the president's controversial budget bill.
The disputes escalated rapidly, culminating in Trump hinting at taking action against Musk's businesses, including Tesla and SpaceX. Trump suggested terminating government subsidies and contracts, which could potentially set Tesla back significantly.
Donald Trump wrote on his social messaging service Truth Social, "The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon's Governmental Subsidies and Contracts." He added, "I was always surprised that Biden didn't do it!"
The drop in Tesla's stock partially reversed a substantial surge in the past eight weeks, following Musk's confirmation that Tesla would be testing an autonomous robotaxi service in Austin, Texas, this month. Investors fear that Trump might not be as eager to advance self-driving car technology in the U.S., which could have a detrimental effect on Tesla.
Wedbush Securities analyst Dan Ives explained that there's concern that increased regulatory hurdles could impede the rollout of Tesla's driverless robocars. He added, "If you start to heighten the regulatory environment, that could delay the path."
The threat made by Trump to cut government contracts could be more of a concern for SpaceX, another one of Musk's ventures. SpaceX has benefited from billions of dollars in funding for NASA projects, including sending astronauts to the International Space Station and developing a mega-rocket for lunar expeditions.
A subsidiary of SpaceX, Starlink, has also reportedly benefited from Musk's political connections in the past. The satellite internet company recently sealed deals in various countries, including Saudi Arabia, where Musk announced approval for Starlink for aviation and maritime use during a trip with Trump.
Despite the current tensions between Trump and Musk, SpaceX has reportedly seen a significant increase in value, with a private financing round and share sale valuing the company at $350 billion. However, all of this could now be at risk due to the ongoing feud.
Tesla's stock experienced a large increase in value after Trump's election in November, as investors bet on reduced regulatory oversight and embracement of driverless cars by the new administration. After reaching an all-time high on December 17, the shares plummeted when Musk's term as head of a government cost-cutting group met with boycotts and harm to Tesla's reputation. However, recent gains occurred when Musk pledged to focus more on Tesla and its upcoming driverless taxi service launch.
With Trump's threats against Musk's companies, investors are now uncertain about the future prospects of Tesla and SpaceX, leading to substantial losses in Tesla stock held by Musk himself.
- The ongoing feud between Elon Musk and President Donald Trump has raised concerns in the finance sector, particularly regarding the future of Tesla and SpaceX.
- In the realm of politics, Trump's threats to terminate government subsidies and contracts could potentially set back Tesla significantly, inciting fear among investors due to the reliance on government support for self-driving car technology.
- Beyond Tesla, SpaceX could also be impacted due to its substantial funding from NASA and possible loss of contracts, as increased political tension with Trump could jeopardize its current and future business ventures.
